BANKRUPTCY LAW.

Dominion, Volume 2, Issue 481, 14 April 1909, Page 11

BANKRUPTCY LAW.

AMENDMENTS. VIEWS OF" REPRESENTATIVE COMMERCIAL MEN. At tho conference of delegates' of New Zealand Chambers of .Commerce, held in Wellington yesterday, Mr. Arthur: R. Robertson, of Auckland, read' an interesting paper on ".Bankruptcy' Act Amendment.'] Aftor briefly sketching .the efforts which havo been made during tho past four years to get tho Act amonded, Mi'.. Robertson said: "A reconstruction of tho.Cabinet lias come about, and, judging from a recent communication from tho now' Minister to tho Auckland Chamber, he'contemplates attending to this long deferred matter at an early date. It is therefore most fitting that this conference should take'tho matter in hand and, by coming as-near as is possiblo to an agreement on points in dispute, help the Hon. tho Minister for Justice to CJimo to a decision as to what tho mercantile community requires.

Controller,of Insolvencies. "Now, to us. business m men, tho Bankruptcy Court is,'or should be, a very live and big thing—we arp, so to speak, up against it oil every turn. Proporly administered, it-would, ho i a boon —poorly administered it is 'a cifrso, more often than not. Can wo get jit properly administered? I think wo can. What we want is, that there shall'bo 'orio . fflaii in control who shall be responsible''for"-' his Department, and who shall havo no one between him and tho Minister m v charge of tho Department—presnm-. ably tho Minister for Justice. In other words/this person in control is to bo tho pernianont head of his' Department—tho Controller of. Insolvencies."

•Trade Assignees. - Mr. Robertson then sot forth tho duties .of the controller, and outlined tho duties •of tho Department. Tho present official assignees would bo done away with, and their place taken by trade assignees, who would require to bo registered/ and who would bo appointed by tho meetings'of creditors.

Acts of Bankruptcy, "1. suppose," he said, "tho, merchants all over the Dominion suiter considerably from debtors selling their business as a going concern, and, having sacrificed it for ready money, cleitring out with tho proceeds; or perhaps selling their business through one of their creditors, who, having deducted their account, pay tho balanco of tho proceeds over and tho debtor then either clears out or finds he has not enough to pay. his other creditors. The present Act does not givo sufficient protection to creditors in this respect,. and it seemed to tho Auckland Chamber that the Acts of Bankruptcy required strengthening ,to afford full protection." "" , " . Penal Clauses. "There-will bo no difference of opinion upon' tho point that at least some of the books of account required to bo kept by Subjection 137 should be enumerated. Eron if only a daily record of monies received and disbursed was insisted on it would bo a distinct advance .upon, tho present position." Mr. Robortson commented on tho present laxity in many, cases in tho keeping of proper bool;3. Discharge. "Tho question of discharge should lio with tho controller. After ho has received tho assignee s report he would bo in just as good a position as a Supremo Court judge to say whether it should be granted, suspended, or refused. Instead of being permissive, as at present, it should bo insisted that every insolvent should bo ordered to apply for his dischargo within, a given timo. la'this connection there is a point worthv of very careful consideration. If an undischarged bankrupt subsequently obtains credit and comes to griof. again, creditors of tho first estate can prove on tho second estato to the disadvantage of tho second lot of unsuspecting creditors—so that if a bankrupt is not to bo obliged to apply for his dischargo it wouk' kJ 1 . fnlr thln - s to •P! , P v .i t, ° in any amending Act that creditors in a previous Bankruptcy can only come in. when tho later estato has paid 20s. in tho £. 'An official record of'insolvencies would provo of' incstimablo value to creditors in' general by giving thorn a chance to protect themselves against undischarged bankrupts, but I would nevertheless profer that all involvents should be required to obtain their discharge." ' The speakor then dealt at some length with tho following questions :—Registration of agreements for sale and purchase of businesses, assignments of insurance policies, and bills of sale on stock and trade. ■;. Prj.vata Assignments. "Tho practice of-having estates realised undor private assignment probably owes its origin to threei causes:— "!• Tho wish, of creditors to avoid publicity. t. Tho want,of satisfactory administration or the Bankruptcy Act. "3. Tho disinclination on the part of creditors to brand an insolvent as 'bankrupt when- his insolvency is brought about D y (( ml sfprtuno or causes beyond his control. • This is all very well, but I contend that the interests of commercial morality demand that a record should be kept of every assignment or.composition. I would absolutely prohibit private assignments, and yet at tho same timo make provision for the avoidance ot publicity where desired and tho branding of a man 'bankrupt'." Resolutions. Mr. Robortson concluded by moving the' following resolutions:— 1. That in tho opinion of this conference an amendment of tho existing bankruptcy law is. necessary. 2. That a: system providing .for a central control of all insolvency business is ot fundamental importance. 3. That tho present limited.number of oincra assignees.' and their deputies should bo roplacod by approved and registered trado assignees, who shall havp statutory powers, and bo'subject to th'o central control mentioned above. 4. That in tho interests of commercial morality and for tho purposes of record li \ dc ' s ' rabl ° that a" assignments-for the boncfit of creditors and insolvencies should bo registered, and that a complete record bo kept of samo at tho point' of central control. w 5. That it-is desirable that tho-penal clauses of the Act should specifically name such books of account as shall bo considered an irreduciblo imnimun> for any person to keep. . <■ 6. That tho above resolutions lVe forwarded, to the Hon. the Minister for Justico, and that ho bo respectfully requested to introduce an amending [Jill during next session of Parliament to give effect to same. ■'•' Discussion. ''■[■' -" Mr. D. M'Pherson (Duncdin) «ead a report drawn up by a committee of the Duncdin Chamber, suggesting a large number of amendments in tho bankruptcy Jaw. Ho also quoted .the opinion of a prominent legal firm to the effect that life insuran.ee poh'cios -in certain cases ought, to go into tho estato— tho wife and children, of course, being always protected. .;,- - . ~ 1 . Mr ; 1 9 B0 - Shirtciiffio (WollLngtoii) thought Mr. Robertson had made out a particularly good case. Tho present laws worked somewhat as regarded creditors, and not. so harshly as they might do, ■ towards. debtors. He was in accord with some "of--tho. resolutions, but he thought others rpquirod amendment. llik own experience was'rthat they got better dividends from private" liquidation than by liquidation through tho Court. Trade assignees were, selected for their special fitness for tho work in hand. Mr. Shirteliffc read some suggestions from tho Wellington Chamber winch might be embodied in tho resolutions. The official assignee should furnish periodical progress reports to tho debtors. Debtors agaii)st-,.whbm .charges were made should not bo* aJJowcd to leave tho Dominion until they haij, answered those charges. He moved the appointment of a committee to draw up amended resolutions. Mr. P. Bax.r (Dunodin) suggested paHnr the resolutions in their present form, leaving the var,;oiis chambers to forward suggestions direct'to the. Minister. Mr. M..M v 'Callum (Auckland) pointed out that the chambers' had already forwarded suggestions to tho Minister,

' Mr. H. C. Tcwsley (Wellington) said that to the commercial-mind the Bankruptcy Act had not properly fulfilled the position in the commercial world that it ought to. lie gavo scleral instances of glaring injustices to certain creditors. Tho preference given to somo classes of creditors was absurd. As at present administered, tho Bankruptcy Act was weak. Tho law required amendment in many directions. It must be patent to over'yono that tho appointment of deputyassignees as at present carried out was very unsatisfactory. Ho thought that a sub-com-mitteo should deal with tho question, and that an amending Bill should bo drawn up for submission to Parliament. Views of Mr. M. Myers. Mr. M. Myers, of the legal firm of Bell, Myers, and Bell, addressed tho conference by request. Ho said that one of tho most important matters to ho considered aroso, not so much under tho Bankruptcy Act itself, as under the Chattels Transfer Act. Tho registration of a bailment was not compulsory, and there wero decisions tho effect of which was to hold that the order and disposition clause of tho Bankruptcy Act did not apply ,to goods in the possession of a bankrupt under an unregistered agreement, whero a custom had arisen in respect of such goods to allow them to bo held under such agreements. Ho thought thero should be some provision enabling a creditor (whero a debtor had absconded) to file a petition in any Court in tho district where tho creditor resided. Tho provisions of the Act relating to public examinations might bo simplified, and tho clause rchting to compositions might perhaps bo made less cumbersome. He suggested that some of tho matters mentioned in Section 138 should bo offences— irrespective of whether the debtor was adjudged bankrupt As tho law now stood, where a debtor absconded, tho creditors had to incur all tho expenses of a bankruptcy petition, etc., before an information could bo laid and tho debtor might very well be able to malio good his escape through the dolay involved The scheme of tho present Act was a,good one, but. there wero defects in administration. Mr. Myers criticised some of the suggestions made by Mr. Robertson. Ho thought the Government might bo, .asked to havo a,'.record kept in Wellington of all insolvencies. Tho whole question was a, difficult cno to deal with, and tho greatest' caro should bo exercised before definite conclusions wore arrived at. Mr. G. Shirtcliffo suggested that tho discussion bo adjourned, and that a committee; with tho assistai.co of Mr. Myers, draw tip amended resolutions for submission, to tho conference next day.

Mr. Kayo (Christcliurch) urged that they should come to a decision on as many points as possibld, and submit their recommendations to tho Minister.

Mr. H. Tolloy (Feilding) said tho law required amending in order to deal more satisfactorily wjih cases whero husband and wife traded togethor. After other discussion,' tho further consideration,of tha question was deferred till noxt day—a committee in tho moantimo to draw up amended resolutions, and submit them to the conferenco at its next sitting.